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Fla.’s existing condo sales up in 4Q 2010

In real estate on February 11, 2011 at 8:40 pm

ORLANDO, Fla. – Feb. 10, 2011 – Sales of existing condominiums in Florida rose 6 percent in fourth quarter 2010 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors®. A total of 17,231 existing condos sold statewide in 4Q 2010; during the same period the year before, a total of 16,229 units changed hands.

Thirteen of Florida’s metropolitan statistical areas (MSAs) reported higher existing condo sales in the fourth quarter, according to Florida Realtors. The statewide existing-condo median sales price was $86,400 for the three-month period; in 4Q 2009, it was $105,600 for a decrease of 18 percent. The statewide existing-condo median price in the fourth quarter was nearly 2.9 percent higher than it was in 3Q 2010.

Looking at Florida’s housing sector in the fourth quarter, Dr. Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness, pointed out that the jobs outlook has a major impact. “Persistently high unemployment constrains demand and feeds into the ongoing foreclosure problem,” Snaith said. “Given the state of the labor market, a continuing decline of home and condo prices in the fourth quarter is not surprising or unexpected. However, it’s important to note the rate of price decline is decelerating.

“As the labor market recovery takes hold in 2011, it will help put a floor beneath price declines and ultimately will provide the basis of housing’s recovery.”

Meanwhile, in the year-to-year quarterly comparison for existing single-family home sales, 39,338 homes sold statewide for the quarter compared to 43,494 homes in 4Q 2009 for a 10 percent decrease. The statewide existing-home median sales price was $134,100 in 4Q 2010; a year earlier, it was $140,500 for a decrease of 5 percent. Sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes, according to the National Association of Realtors® (NAR). The median is a typical market price where half the homes sold for more, half for less.

Optimism has increased slowly but steadily in Florida real estate markets through the fourth quarter of 2010, according to the University of Florida’s Bergstrom Center for Real Estate Studies’ latest quarterly survey of real estate trends. The report surveys economists, industry executives, real estate scholars, researchers and other experts.

Center Director Timothy Becker noted improvement in several key categories, including the outlook for sales in new single-family homes and condominiums, office occupancy, retail occupancy, land investment and capital availability. Respondents’ expectations for occupancy and rent increased across every property type, while the investment outlook rose in a majority of the property types. The statewide outlook was the highest since the survey’s inception in 2006, he said.

“Overall, the market appears to be improving and will continue to improve at a slow pace over the next year,” Becker said.

Low mortgage rates continued to be available during the fourth quarter of the year. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 4.41 percent in 4Q 2010; one year earlier, it averaged 4.92 percent.

Related: NAR finds price stabilization and increased sales in most U.S. areas.

Reprinted by Permission: © 2011 Florida Realtors®

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5 Buyer tips for Distressed Properties

In bank-owned properties, Buyers, closing, credit, Distressed Sales, Downtown Miami, fannie mae, FHA, First-Time Buyer, Fl, florida, forclosure, foreclosure, Freddie Mac, government, Home Buyer, home sellers, HomePath, HomeSteps, HUD, Investing, Investor, lenders, Loan Program, miami beach, Miami-Dade County, mortgage, real estate, REO, Short Sales, South Beach on January 24, 2011 at 4:56 pm

Miami Beach, Fla. – Jan. 24, 2011 – Wenceslao Fernandez, Jr, a Florida real estate agent with Keller Williams Realty who specializes in Downtown Miami and Miami Beach properties, has come up with five tips to help distressed property buyers. These tips should work in virtually any U.S. market.

Wenceslao says that, “even seasoned investors don’t always follow or understand these practical tips”.

1. Work with a full-time Realtor(c). After the bust, many agents left the business so, not all real estate agents are in the business full time or even Realtors(c) any more. The term Realtor(c) can only be used by members of the National Association of Realtors (NAR), who adhere to their strict Code of Ethics. When it comes to distressed properties, a specialist is your best bet. Look for a Realtor(c) who is also a Certified Distressed Property Expert (www.CDPE.com), and who’s able to guide you with the right strategy for making offers on Short Sales or REOs. Many buyers assume that all agents have the knowledge to help them with these two distinct types of distressed property sellers. Like with hiring any professional (doctor, attorney, plumber, CPA), hiring the right agent to help you through this process, is key.

2. REO properties have the advantage of faster closings. Their disadvantage is that, more than 90% of the time, they only sell for cash and there may be multiple, competing offers on the table. On the other hand, although you can also pick up a Short Sale at a bargain price, there is nothing “short” about the amount of time they take to even be accepted. Some lenders negotiate quickly, others still drag their feet. It is not unusual to wait two or three months or longer, just to hear whether your offer was accepted by the seller’s lender – then the actual sales and closing process begins. Their advantage is that often, they are in better condition, especially if they are still being lived-in by the owner(s), and your offer may be the only offer the lender is considering for approval – minimizing the bidding wars of multiple offers often seen with REO sales.

3. Bargaining for less than the asking price will be a function of many factors. Many REO’s are listed well below market and attract a lot of attention. Making sure you offers wins the “bid”, may require a full-price offer and often, even a slightly more aggressive offer. Short sales may allow you a little more flexibility – as long as the offer is within reason for the property condition and local (building or area), market condition. Sellers of REO don’t typically want to hold these too long and are usually motivated. Lenders who have been going through a long, pre-foreclosure process are also motivated but may only be “servicing” the loan and the bulk of the decision, may be dependent on the investors behind the loan and/or mortgage insurance folk.

4. Avoid complicated offers. REO sellers typically prefer clean offers. The less contingencies you attach to your offer, the cleaner the transaction flow is expected, the better the chances are that they’ll agree with your offer. Lenders looking to approve a short sale may agree to some concessions. The worst that can happen is that they say no. In either case, sometimes lenders are quite accommodating – even REO lenders who already have possession of the property are known to give concessions if inspections reveal certain problems not previously known or problems which were not readily visible. Otherwise, most of these purchases are “as-is, where-is” and you should know what you are getting into. Being “handy” may not qualify you to throughly inspect and understand what you are about to buy.

5. Get the right pre-approval from the right lender. Regardless of which type of property you intend to buy (whether distressed or not), having this approval letter ahead of time will ensure you move forward. Most offers to be considered, must be accompanied by this letter. REO properties are typically sold for cash. However, properties now held by Fannie Mae, Freddie Mac or HUD, will often consider financing offers during the first 15 days a property is listed, as long as the buyer is an owner-occupant. Even if the REO or Short Sale property needs repairs, there are loans that allow the buyer to borrow additional funds for repairs. Make sure you lender understands FHA-203k, Home Steps and Home Path loans and that they have a thorough understanding of any other government program you may qualify for.

Want to know more? Contact Wenceslao Fernandez Jr HERE.

MIAMI-DADE: INVESTORS WIN. RENTING MAY BE YOUR ONLY CHOICE – BUT NOT MAKE THE MOST SENSE FOR YOU.

In real estate on January 18, 2011 at 12:52 pm

According to an article published in today’s Miami Herald, the rental market is getting stronger.

Surely, with all the foreclosures taking place (23,000 in 2010 in Miami-Dade according to a recent article from Condo Vultures), and 34,400 foreclosure filings in 2010 according to Miami-Dade county records), these owners are unable to do anything other than rent these days and for a long time coming.

In fact, each foreclosure actually slows down our recovery since none of these previous owners will be likely able to buy for several years. That’s some 23,000 in 2010 alone according to the Condo Vultures report. Instead, lenders should be looking to facilitate short sales since these sellers would be able to qualify for a mortgage and buy again possibly in as few as 2 or 3 years, helping our recovery, stabilizes prices faster and costs everyone less.

Add the urbanizing young professionals emancipating, divorcing or divorced couples and other demand forces to the equation in addition to the fact that few if any new units are coming to market and others are being left vacant, converted to hotel or other use, and you have a perfect storm for investors to gain cash flow opportunities and net worth as property values improve.

The decision to buy or rent is often a difficult one. On the one hand, you get the guy named in the Miami Herald’s article whose rent went up 29% and wonders what in the world is the landlord thinking. After all, there are so many vacant properties out there, right?

The problem is that, lenders are keeping these vacant, foreclosed properties vacant, which is keeping the availability (supply) of rental units low. I mean, if lenders foreclosed 23,000 units in 2010, that means that there are 23,000 vacant properties which are neither occupied by owners or renters. In fact, this also means that there are 23,000 families now occupying that many rental properties somewhere else in town. This is what has kept many builders who have unsold inventory afloat, and paying their loans.

Buyers on the other hand have the opportunity to buy repossessed properties but, unless they are packing CASH…they’re out of the equation. Well over 80% of properties these days are selling for cash. Among the distressed properties sold (almost 72% of all distressed properties sold in December, 2010 were foreclosed properties – http://wp.me/p9Ggo-e4), this number is much higher and probably closer to more than 90% sell for cash.

This means that many would-be buyers who are unable to pay all cash and still have funds for repairs, etc will have to continue renting – at whatever the landlords want to charge these days and probably…for a few years to come.

Of course, builders are probably salivating and closely watching the time they’ll be able to come back and build for this under $200,000 price-point buyer (this is the most coveted and sought after market segment by investors and first-time buyers alike).

Just the same, don’t guess or take someone else’s word for it. If you are in the market to buy or you are tired of renting and watching your rents go up year after year, visit http://tinyurl.com/ShouldIRentOrBuy, enter your own numbers and see if buying instead would make better sense for YOU.

Typically, if you intend to stay in the property for AT LEAST 5 to 7 years or more, you are likely to do better buying. Still…do the math yourself using the above link.

Remember though that, lending is still shaky and you are likely to need an above average score, a 20-30% for down payment and closing costs (unless you are able to get into a Freddie Mac, Fannie Mae or FHA program – which there are still few properties that qualify for these), must be able to show all income sources and speaking with a professional Mortgage Broker or knowledgeable Bank Lending Officer BEFORE you start shopping, is critical in this market.

Investors and buyers with cash or access to cash for property acquisition and repairs, etc are going to be the new rich kids in town. These folks are buying at up to 65% discount over today’s Median Closed Prices (again, refer to my earlier post: http://wp.me/p9Ggo-e4).

The Average Closed Price* for REO’s in December, 2010 was $121,000 000 (down 4.9% from November, 2010 and down 7.5% from December, 2009), compared to Miami-Dade’s overall Average Closed Price of $271,000 (up 12.4% from 11/2010 and down 5.2% from 12/2009), this is a potential discount of almost 45% by buying REOs over others.

The Median Closed Price* for REOs in December, 2010 was $84,000 000 (up 7.7% from November, 2010 but down 11.6% from December, 2009), compared to Miami-Dade’s overall Median Closed Price of $130,000 which was down 3.7% from 11/2010 and down 18.7% from 12/2009.. This means that, as of the things are now, buying an REO may provide an additional 64.6% discount over non-REO purchases based on the Median Closed Price levels.

Therefore, cash buyers and any owner-occupant able to pick up one of these deals (especially from HUD, Freddie Mac or Fannie Mae), will be the biggest winners in 2011 – and the opportunity window is closing fast.

* All reports are published January 2011, based on data available at the end of December 2010. This representation is based in whole or in part on data supplied by Realtor Association of Greater Miami and the Beaches, Realtor Association of Miami-Dade County, Realtor Association of Greater Fort Lauderdale and Northwestern Dade Association of Realtors. Neither the Board or its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the Board or its MLS may not reflect all real estate activity in the market.

Miami-Dade: 71.9% of all Distressed Properties Sold in December, 2010 were REOs

In real estate on January 17, 2011 at 2:07 pm

In December, 2010, 64.8% of all properties Sold (in the MLS), were distressed sales (which includes Short Sales and REOs) – http://wp.me/p9Ggo-dJ

Among these, REOs Sold (closed), accounted for approximately 71.89% of all distressed properties sold in December, 2010. This is up 27.7% from November/2010 and up a healthy 52.1% from 12/09.

Unfortunately, the number of REO properties for sale and the number of new REO coming to market are both also up significantly.

December, 2010 saw a 37.1% increase over November in the number of new REO listings, also increasing the total number of REO units for sale to 2361, up 22.6% from November.

Moreover, the number of new REO listings for December, 2010 was up 84.8% from December, 2009, causing the total number of REO properties available for sale to go up by a whopping 133.3% from December, 2009.

I’m not sure about you but…if the so called “shadow inventory” is in a way, any kind of multiple of these numbers…I will venture to guess that we will be at this game for a looooonnnng time.

This market segment is so healthy that, at the current pace, with Pending Transactions (a leading indicator of future closed inventory), clipping at a healthy 21.5% from November, 2010 and up 117.3% from December, 2009, this makes this market segment shine compared to non-distressed sales or Short Sales.

In fact, the Months of Inventory based on Closed sales for December, 2010 was of 2.4 (meaning these homes are not sitting on the market long) and a very healthy Absorption Rate based on Closed Sales of 41.9 units.

Here is the challenge for those thinking they can buy an REO (foreclosed) property, if you are not able to or you are not teamed up with a professional that can help you make a snap decision about whether the property you are looking at meets your buying criteria for the level of repairs required, etc and, if you do not have cash or access to cash at the snap of your fingers, this market segment is largely, not for you.

If you are John or Jane Buyer, looking to buy your first home, these homes, by and large, need repairs and therefore, unless you are paying cash and have enough reserve funds to make all necessary repairs, it is quite atypical that you will be able to get any form of financing on any of these properties.

The only “possible” exception are, Fannie Mae or Freddie Mac REO properties that qualify for their Home Steps or Home Path lending programs. These programs typically allow owner-occupant buyers to make offers during the first 15 days the property is on the market and bars investors and any other non-owner occupants from submitting offers during this time frame. Only after the 16th day can non-owner occupant offers be considered. In addition, owner-occupants may apply for a 3% loan from these institutions and get a loan similar to FHA.

Sadly, over 90% of all REO properties sold, sell for cash since, most first-time buyers who are the bulk of this market segment priced under $150,000, do not have the means to pay cash for these properties and still have enough funds set aside for all required repairs and/or lien/violation cures and investors do. Obviously, investors pursue these because these afford them the best possibility for renting them with a positive cash-flow and/or (eventually), sell them over time to end-user buyers like John or Jane Buyer.

In addition, the Average Closed Price for REO’s in December, 2010 was $121,000 000 (down 4.9% from November, 2010 and down 7.5% from December, 2009), compared to Miami-Dade’s overall Average Closed Price of $271,000 (up 12.4% from 11/2010 and down 5.2% from 12/2009), this is a potential discount of almost 45% by buying REOs over others.

The Median Closed Price for REOs in December, 2010 was $84,000 000 (up 7.7% from November, 2010 but down 11.6% from December, 2009), compared to Miami-Dade’s overall Median Closed Price of $130,000 which was down 3.7% from 11/2010 and down 18.7% from 12/2009.. This means that, as of the things are now, buying an REO may provide an additional 64.6% discount over non-REO purchases based on the Median Closed Price levels.

Unfortunately for non-investors buyers who do not have the discretionary cash or access to it, is left looking at still dreaded Short Sale (pre-foreclosure), properties, which continue to have a very long and frustrating purchase process.

Even worse is the condo market which, more often than not, leaves buyers unable to get any type of financing in many condo buildings unless assisted by some government program since, these special financing programs are few and difficult to access.

* All reports are published January 2011, based on data available at the end of December 2010. This representation is based in whole or in part on data supplied by Realtor Association of Greater Miami and the Beaches, Realtor Association of Miami-Dade County, Realtor Association of Greater Fort Lauderdale and Northwestern Dade Association of Realtors. Neither the Board or its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the Board or its MLS may not reflect all real estate activity in the market.

I Can’t Pay My Mortgage and I Don’t Know What To Do :-/

In Distressed Sales, fannie mae, FHA, First Time Sellers, florida, forclosure, foreclosure, foreclosure moratorium, foreclosure prevention scam, Freddie Mac, government, HAFA, HAMP, home sellers, homeowner, HomePath, HomeSteps, HUD, Industry trends, IRS, Market Report, miami beach, Miami-Dade County, modification, mortgage, NAR, National, option-arm, real estate, REO, scams, Sellers, Short Sales, South Beach, Tax Matters, Trends, Wenceslao on December 22, 2010 at 4:05 pm

About 75% of folk who lose their home to foreclosure, do so because they either do not seek help, or they get the wrong kind of help.

I am often asked legal questions to which I must invariably reply…I am not an attorney. The best I can do is speak from personal experience and remind them that it is imperative to seek competent and relevant legal and tax advise from active professionals.

In real estate for example, not all real estate agents are even Realtors.  Realtors are agents who as members of the National Association of Realtors(c) (NAR), they must adhere to NAR’s strict Code of Ethics. In addition, many are no longer in the business full-time nor are they truly keeping up with all the industry changes.

Homeoners looking to sell must always seek the assistance of full-time professionals. When in distress, they must take extra precautions in order to avoid falling victims of scams and even, downright fraud.

Below are some of the most common Frequently Asked Questions (FAQs) about foreclosure avoidance.  If you have further questions not addressed below, or would like additional information and resources, feel free to Contact Us.

Do I qualify for a short sale?

The qualifications for a short sale include any or all of the following:

  1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  2. Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

What is a mortgage modification?

A mortgage modification is a process through which your mortgage lender changes any or all of the following:

  • Your interest rate
  • Your principal balance (through a reduction)
  • Your loan terms (example: from an adjustable to a fixed rate)

This process can allow borrowers to stay in their property when they can no longer afford their current mortgage payments.

Why would a lender modify my mortgage?

Lenders have realized that in some cases it is better for them to work with current borrowers to lower payments or possibly improve terms in order to keep homeowners in their properties. The average foreclosure can cost a lender from 35-50% of the value of a property, so keeping borrowers in their homes is a good option for everyone.

What do I need to qualify for a mortgage modification?

According to the Making Home Affordable Web site (www.MakingHomeAffordable.gov), you will need the following information for your lender to consider a modification:

  • Information about your first mortgage, such as your monthly mortgage statement
  • Information about any second mortgage or home equity line of credit on the house
  • Account balances and minimum monthly payments due on all of your credit cards
  • Account balances and monthly payments on all your other debts such as student loans and car loans
  • Your most recent income tax return
  • Information about your savings and other assets
  • Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources

If applicable, it may also be helpful to have a letter describing any circumstances that caused your income to reduce or expenses to increase (job loss, divorce, illness, etc.)

How do I qualify for a mortgage modification?

The first call you make should be to your lender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking, you can ask to be referred to one of the following departments (different lenders have different names for these departments):

Prior to contacting your mortgage lender you can quickly complete an eligibility test atwww.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP). For a list of mortgage lenders and servicers, visit www.HopeNow.com.

What if I don’t qualify for a mortgage modification, can’t afford my home, and owe more than it’s worth?

You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale. Agents like me, with the Certified Distressed Property Expert® Designation, have undergone extensive training in how to process and negotiate short sales. A short sale allows you to sell your home for less than what you owe and avoid foreclosure. Speak to your market expert to see if you may qualify.

What is a Home Affordable Refinance?

If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.

What are the qualifications for a Home Affordable Refinance?

According to the resources released by the government, following are a list of qualifications:

  • You are the owner occupant of a one- to four-unit home
  • The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (see Useful Links)
  • At the time you apply, you are current on your mortgage payments (you haven’t been more than 30 days late on your mortgage payment in the last 12 months, or if you have had the loan for less than 12 months, you have never missed a payment)
  • You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
  • You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan

Courtesy:  ©2009 Distressed Property Institute, LLC. | All Rights Reserved

The Distressed Property Institute LLC is behind the Certified Distressed Property Expert (CDPE) designation that over 29,000 professionals now hold.

Average 30-year fixed mortgage rises to 4.83%

In Buyers, credit, Home Buyer, Industry trends, Interest Rates, Loan Program, miami beach, Miami-Dade County, mortgage, real estate, Trends on December 17, 2010 at 6:01 pm

NEW YORK (AP) – Dec. 17, 2010 – Rates on fixed mortgages surged for the fifth straight week, reflecting higher yields on long-term Treasurys.

Freddie Mac said Thursday the average rate on a 30-year fixed mortgage rose to 4.83 percent from 4.61 percent in the previous week. Last month, the rate hit a 40-year low of 4.17 percent.

The average rate on the 15-year loan also increased to 4.17 percent from 3.96 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.

Rates are on the rise after falling for seven months.

Investors are shifting money out of Treasurys and into stocks. That’s largely on the expectation that the tax-cut plan that Congress is set to approve will spur growth and potentially higher inflation.

Yields tend to rise on fears of higher inflation. Mortgage rates track the yields on the 10-year Treasury note.

The sell-off in the 10-year Treasury note is complicating the Federal Reserve’s efforts to lower interest rates by buying up $600 billion in Treasurys. Some traders had hoped the central bank would boost the scale of its purchases to keep interest rates down.

The increase in rates already is chilling the housing market. Refinance activity fell last week for the fifth straight week, while the number of people applying for a mortgage to purchase a home dropped 5 percent from the previous week, the Mortgage Bankers Association said.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage rose to 3.77 percent from 3.60 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.

The average rate on one-year adjustable-rate home loans edged up to 3.35 percent from 3.27 percent.

The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for all mortgages in Freddie Mac’s survey was 0.7 point.

Copyright © 2010 The Associated Press, Janna Herron, AP real estate writer.

With Average Closed Prices and Median Closed Prices up two months in a row in Miami-Dade and rates up for 5th straight week you must carefully consider – are you being priced-out of the market….again?!

 

Frequently Asked Questions About Foreclosure

In forclosure, foreclosure, foreclosure moratorium, foreclosure prevention scam, government, HAFA, HAMP, homeowner, Industry trends, miami, miami beach, Miami-Dade County, modification, mortgage, Multi-Family Real Estate, real estate, scams, Sellers, Short Sales, South Beach on November 9, 2010 at 2:34 pm

It is understandable to have questions when coping with a new and challenging situation, especially when a home is at stake. The reality is that millions of homeowners across the country are finding out that they have more questions than answers.

We hope that the following information will help you better understand the circumstances. If you have further questions not addressed below, or would like additional information resources, feel free to Contact Us.

Do I qualify for a short sale?

The qualifications for a short sale include any or all of the following:

  1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  2. Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

What is a mortgage modification?

A mortgage modification is a process through which your mortgage lender changes any or all of the following:

  • Your interest rate
  • Your principal balance (through a reduction)
  • Your loan terms (example: from an adjustable to a fixed rate)

This process can allow borrowers to stay in their property when they can no longer afford their current mortgage payments.

Why would a lender modify my mortgage?

Lenders have realized that in some cases it is better for them to work with current borrowers to lower payments or possibly improve terms in order to keep homeowners in their properties. The average foreclosure can cost a lender from 35-50% of the value of a property, so keeping borrowers in their homes is a good option for everyone.

What do I need to qualify for a mortgage modification?

According to the Making Home Affordable Web site (www.MakingHomeAffordable.gov), you will need the following information for your lender to consider a modification:

  • Information about your first mortgage, such as your monthly mortgage statement
  • Information about any second mortgage or home equity line of credit on the house
  • Account balances and minimum monthly payments due on all of your credit cards
  • Account balances and monthly payments on all your other debts such as student loans and car loans
  • Your most recent income tax return
  • Information about your savings and other assets
  • Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources

If applicable, it may also be helpful to have a letter describing any circumstances that caused your income to reduce or expenses to increase (job loss, divorce, illness, etc.)

How do I qualify for a mortgage modification?

The first call you make should be to your lender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking, you can ask to be referred to one of the following departments (different lenders have different names for these departments):

Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP). For a list of mortgage lenders and servicers, visit www.HopeNow.com.

What if I don’t qualify for a mortgage modification, can’t afford my home, and owe more than it’s worth?

You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale. Agents like me, with the Certified Distressed Property Expert® Designation, have undergone extensive training in how to process and negotiate short sales. A short sale allows you to sell your home for less than what you owe and avoid foreclosure. Speak to your market expert to see if you may qualify.

What is a Home Affordable Refinance?

If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.

What are the qualifications for a Home Affordable Refinance?

According to the resources released by the government, following are a list of qualifications:

  • You are the owner occupant of a one- to four-unit home
  • The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (see Useful Links)
  • At the time you apply, you are current on your mortgage payments (you haven’t been more than 30 days late on your mortgage payment in the last 12 months, or if you have had the loan for less than 12 months, you have never missed a payment)
  • You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
  • You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Locate a CDPE in your area for an evaluation of your individual situation, property value, and possible options.

===

If you or someone you know and love is facing this difficult challenge, make sure to Contact Us. 7 our of 10 foreclosures happen because the borrower (home owner), did not seek proper professional advise from experts dedicated full-time to helping folk find ways to overcome this challenge. Get the answers that suit YOUR needs, today. Get more answers at http://www.cdpe.com/faqs

Your Mortgage Matters

In Uncategorized on February 24, 2008 at 10:42 pm

The market may be turning and therefore, the time has come to reevaluate your mortgage situation by studying the different types of mortgages that are still available for most people out there.  In general, consider the following:Conventional Conforming:

These are mortgages that are funded by banks but eligible to be backed by FNMA aka “Fannie Mae” (Federal National Mortgage Association) and FHMLC aka Freddie Mac (Federal Home Mortgage Loan Corp).  Both FNMA & FHMLC are Government Sponsored Entities are were designed by the Government to make mortgages available to the general public.

  • Maximum Loan Amount is $417,000 (higher in HI & AK-plus changes in the law may increase these limits nationwide), but can be higher for 2, 3 or 4 unit properties.
  • Available for Owner Occupied, Second Homes and Investment Properties.
  • Generally require borrowers to document income & assets that justify their ability to repay the loan.
  • Generally require borrowers to have fair to excellent credit.
  • Generally available with minimum 5% down payment.

Government Loans:

These are mortgages that are funded by banks but eligible to be backed by the Department of Housing & Urban Development (HUD).  There are 2 common kinds of Government Loans:

FHA: Federal Housing Administration.

  • For Dade County the maximum loan amount is $380,000 (higher for 2, 3 or 4 unit properties).
  • Available for OWNER OCCUPIED PROPERTIES ONLY (second homes and investment properties not allowed).
  • Allow for minimum 3% down payment which can be a gift from a family member, church, civic group or non-profit organization.
  • Always require borrowers to document income & assets that justify their ability to repay.
  • Poor credit is allowed with compensating factors.

VA: Veteran’s Administration.

  • Designed as an option for eligible Veterans which must get an “eligibility certificate” from the local VA office.
  • 100% financing allowed (subject to eligibility certificate).
  • Always requires documentation of income & assets that justify the ability to repay.
  • Uses the same loan amount limits as FHA.
  • Poor credit is allowed with compensating Factors.

Non Conforming Loans
Jumbo Loans:

  • Loans from $417,001 to $1,500,000
  • Generally meet the same criteria as Conventional Conforming Loans except that down payment requirements are higher.
  • These loans are not eligible to be backed by HUD, FNMA or FHMLC.
  • Generally requires good to excellent credit.

Super Jumbo Loans:

  • Loans from $1,500,001 to $3,000,000
  • Generally slightly more restrictive than Conventional Conforming Loans
  • Down Payments generally range from 20% to 40%.
  • These loans are not eligible to be backed by HUD, FNMA or FHMLC.
  • Generally requires good to excellent credit.

Mega Jumbo Loans:

  • Loans over $3,000,000.
  • Much more restrictive than Conventional Conforming Loans
  • Significant income & assets must be demonstrated.
  • Down Payments generally 40% to 50%
  • These loans are not eligible to be backed by HUD, FNMA or FHMLC.
  • Generally requires excellent credit

Expanded Criteria Loans

  • Generally not eligible to be backed by HUD, FNMA or FHMLC.
  • Down Payments generally as low as 10% or as high as 50%
  • May not be required to document income, assets, employment, etc.
  • Generally requires excellent credit

Other factors to consider which will help you understand how loans are priced are as follows:

Risk Based Pricing

Recently nearly every loan program (except those backed by HUD) are moving to a “risk based pricing” model.  The lower the risk – the lower the rate.  The higher the risk – the higher the rate.

Risk Factors that may INCREASE the rate:  Any loan with these factors has a higher probability of default and or loss to the lender and therefore the rate charged to the borrower is higher.  The more risk factors layered into the loan results in a progressively higher rate.

  • Low Down Payment
  • Lower credit score
  • Inability to document income (stated income / no income programs)
  • Cash out refinances
  • Multi-family properties
  • Condos (high rise or low rise)
  • Second Homes
  • Investment Properties
  • Multi-family properties
  • Properties needing renovation or construction
  • “Piggyback loans” where there is also a 2nd mortgage involved
  • Job instability
  • High Debt-to-income ratio
  • Lack of reserves / cash on hand / savings

Risk Factors that may DECREASE the rate:

  • Large Down Payment
  • Excellent Credit Score
  • Single Family Residence (condo or house)
  • Low Debt-to-income ratio
  • Ability to document income & assets
  • Excellent / lengthy job history
  • Significant reserves / savings
  • Minimal use of credit card & other consumer debt
  • Property values near or below the median for the area (in a slow market more expensive properties are often harder to sell)

Broker vs Banker

Loans can be arranged through a “mortgage broker” who acts independently and “sells” the loan to a bank.  The broker gets paid a fee for his / her work from either the bank, the customer or both.  Loans can also be arranged through a “loan officer” who works directly for the bank.

Key Differences:

Broker:

  • Generally can arrange loans through several different banks
  • Generally earns income by charging the customer fees

Loan Officer:

  • Generally works for only one bank / lender and the line of products offered by them only
  • Generally earns salary or commission paid by the bank – not the customer

Other factors necessary to provide financing for the purchase or refinance of any real estate are:

Appraisals

Federal Law Requires:

  • Appraisals be ordered by the bank – not the Realtor, customer or other interested party
  • Appraisals be ordered through licensed appraisers and not by appraisers selected specifically by the loan officer or other interested parties

Other Important Facts:

  • Generally used to determine MARKET VALUE not to evaluate the quality of the home, functional defects or condition
  • Generally good for 90 days
  • Compares the subject property to other SIMILAR homes in the market area.
  • Will utilize past sales as well as current listings to determine market value.

Misconceptions:

  • A house that has recently been given $200,000 in remodeling upgrades will appraise for $200,000 more than the comparable, unimproved houses.
  •  Not true … improvements do not add dollar-for-dollar to the bottom line.
  • An appraisal ordered by the seller, customer or other party is acceptable.
  •  Not true … appraisals must be ordered by a regulated lender to be acceptable for a loan transaction.  The lender may not accept all appraisals ordered from other lenders.

As you can see, there’s a lot involved in obtaining a loan, regardless of weather you are looking to buy your first home, second or investment home, or to refinance your present mortgage. 

Typically, weather you go to a bank or to a broker, all necessary paperwork needs to be reviewed and compared for accuracy, making sure it all makes sense and in order to avoid issues down the line.

Brokers for example, don’t get paid until after closing.  Bankers are paid a salary regardless of a loan closing.  Both have a lot to protect, however.  Some will argue that brokers will tend to do things that may not be quite “apropo” in order to get a loan closed, while arguing that bankers are not motivated at all to bend in any way to ensure a loan closes.  If the numbers don’t make sense, they typically don’t try any harder than they must.  5pm is quiting time while brokers must come up with all the ways they can in order to ensure they get paid.

All great arguments but, think about it.  Once you find a good honest broker, they have access to products from many sources, and will not rest until you close.  Just make sure to check out their record before signing up.

This, in my opinion, is no different than the homework you must do when you need a mechanic, doctor, lawyer, accountant, bank, banker or mortgage professional.  Even buying big ticket items, it is typically much better to buy a bed mattress for instance from a reputable house than at a flea market, don’t you think?

The bottom line is this, regardless of how many homes you’ve bought or sold or how many loans you have secured, hiring the right professional for the job is as important a decision as the decision to not going at it alone.

Consider doing your taxes on your own, repair jobs for your home or auto, or even medical, investment or any other venture.  Many attempt to go at it alone and many of those succeed.  Most however, end up short changed when compared to the results they would have obtained using the help of a professional who knows their business.

Of course, if you seek professional help, just ask me and you shall receive it.

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